The federal government is concerned casual workers could "double dip" into entitlements, as businesses push for a new 'permanent casual worker' category.
The NSW Business Chamber proposed the category after a recent Federal Court decision ruled a casual truck driver was entitled to annual leave, as he had a regular pattern of work for 12 years.
Casual workers receive higher pay than salaried workers, as they do not get paid leave.
A spokesman for Industrial Relations Minister Kelly O'Dwyer says it's up to the Fair Work Commission to decide if permanent casual workers should get the tick of approval.
"The government is concerned about the potential impact of double dipping on small business and the cost to jobs," the spokesman said in a statement to AAP.
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Legal advice in relation to the recent Federal Court judgment had been sought, he added, and the government would examine its options.
NSW Business Chamber CEO Stephen Cartwright says Australian businesses are "stunned and understandably frustrated" by the court decision.
He says the new category would ensure employers have flexibility and prevent workers "double dipping" employment benefits.
"The current system of modern awards has been upended and we must get this fixed as soon as possible," Mr Cartwright said in a statement on Tuesday.
The recent legal decision shows some casuals can now claim casual loading, annual leave and sick leave, the group argues.
The Australian Council of Trade Unions says the change would see casual loading cut from 25 per cent to 10 per cent and leave workers with no guaranteed hours or predictable income week to week.
ACTU secretary Sally McManus says the court's decision is common sense, and the new category would threaten the job security of casual workers.
"We need to change the rules so people have jobs they can count on, so that people have the choice of converting from casual to permanent if they work regular hours," she said in a statement.
"We need a proper definition of casual that protects the rights people have fought for, not erodes them like this proposal does."
A recent RBA research paper shows the increasing number of casual workers is keeping wages down, as well as automation-induced job insecurity, falling unionisation and wage adjustment following the mining boom.
